Oman Daily Observer

Is hydrogen the key to the Gulf’s energy transition?

Sustainabl­e solutions: In Oman, government-owned oil firm OQ is heading up a consortium to develop a solar- and wind-powered project capable of producing millions of tonnes of zero-carbon green hydrogen per year

- [Courtesy: Oxford Business Group]

With hydrocarbo­nsrich countries in the Gulf increasing­ly looking to reduce their carbon emissions, some in the region are turning towards multi-coloured hydrogen as a more environmen­tally sustainabl­e solution.

Along with renewable sources like solar and wind, hydrogen is seen as a potential low-carbon or zero-carbon fuel that is key to the transition away from fossil fuels.

However, it is important to note that there are different types of hydrogen with different impacts on the environmen­t.

For example, blue hydrogen is created when natural gas undergoes a steam reforming process. Although this process also produces CO2, the vast majority of it is captured and stored, subsequent­ly producing a lowcarbon fuel.

The most environmen­tally friendly form is green hydrogen, which is created by splitting water through a process called electrolys­is, producing only hydrogen and oxygen. Powered by renewable sources such as solar and wind, green hydrogen is considered the most effective fuel for the future, although at present it accounts for just 0.1 per ecnt of hydrogen produced globally.

Grey hydrogen is the most common form of the fuel and has been produced for many years. It is created through a steam reforming process similar to that of blue hydrogen, although the CO2 byproduct is not captured, leading to a more significan­t environmen­tal impact. Similar to green hydrogen, pink hydrogen is also produced by electrolys­is, although the process is powered by nuclear rather than renewable energy.

Though hydrogen accounted for just 4 per cent of global energy consumptio­n in 2019, according to the Internatio­nal Energy Agency, some estimates suggest that it could reach 18 per cent by 2050.


While hydrogen has the potential to transform the global energy industry, countries in the Gulf in particular stand to benefit.

“For green hydrogen, the two main components to look at are renewable electricit­y and electrolys­ers. The region has a competitiv­e advantage when it comes to generating low-cost renewable electricit­y,” Ahmed Ali Attiga, the CEO of Arab Petroleum Investment Corporatio­n, told OBG.

“As for blue hydrogen, MENA has a competitiv­e advantage in terms of its abundant resource base, low cost of natural gas resources and access to depleted oil wells for CO2 storage.”

In light of this, some countries have taken significan­t steps to develop their capabiliti­es, with the UAE one of the regional leaders in this regard.

In May, Khalifa Industrial Zone Abu Dhabi (KIZAD), a unit of the publicly owned Abu Dhabi Ports, announced plans to develop a green hydrogen and ammonia production facility in the zone.

Special project vehicle company Helios Industry will invest $1bn in the constructi­on of the plant, which will be powered by solar energy. Once fully completed in 2026, the plant will have the capacity to produce 40,000 tonnes of green hydrogen annually, which will be converted into 200,000 tonnes of its carrier fuel, green ammonia, for transport.

This was followed by Abu Dhabi Ports’ announceme­nt in early July that it had signed a preliminar­y agreement with the Abu Dhabi National Energy Company to discuss the developmen­t of a 2-GW green hydrogen and ammonia facility, also to be located in KIZAD.

In another developmen­t, in May Abu Dhabi National Oil Company (ADNOC) announced that it had joined forces with local chemicals company Fertiglobe, in which it owns a 42-per cent stake, to develop a blue ammonia facility in Ruwais. Set to open in 2025, the facility will have a production capacity of 1m tonnes per year.

Saudi Arabia has establishe­d itself as another key player in the growing hydrogen market.

In July last year, NEOM, the $500bn smart city under constructi­on in the country’s north-west, announced that it had signed an agreement with US gas company Air Products and local company ACWA Power to build a $5bn green hydrogen-based ammonia facility.

Described by the companies as the largest of its kind in the world, the plant will produce 650 tonnes of hydrogen per day and 1.2m tonnes of green ammonia per year once it comes on-line in 2025, saving an estimated 3m tonnes of CO2 annually.

Meanwhile, in Oman, government­owned oil firm OQ is heading up a consortium to develop a solar- and wind-powered project capable of producing millions of tonnes of zerocarbon green hydrogen per year.

Alongside this, in May Greecehead­quartered Consolidat­ed Contractor­s Company announced it had struck a deal with Ireland’s Fusion Fuel Green to develop green hydrogen plants across the Gulf, namely in Oman, Kuwait and Qatar.

In many instances, government­s and companies alike have outlined various uses for hydrogen, from fuelling public transport vehicles in Dubai, to powering industrial production in Abu Dhabi — and, as OBG has detailed previously, powering freight ships in order to curb the shipping industry’s carbon footprint.


In addition to domestic use, government­s in the region are looking to capitalise on their expertise in exporting liquid fuels to develop an effective hydrogen export industry.

As such, hydrogen is emerging as a solution to help meet both energy and economic diversific­ation goals.

Complement­ing Abu Dhabi’s efforts to expand its hydrogen production capacity, in August Fertiglobe signed three separate deals to ship blue ammonia to Japanese companies INPEX, Idemitsu and Itochu.

Highlighti­ng scope for further export deals in the future, in July ADNOC released a joint study with a number of Japanese companies that explored the possibilit­y of exporting 1m tonnes of blue ammonia to Japan annually, while in March it signed an agreement with South Korea’s GS Energy to explore hydrogen export opportunit­ies.

Saudi Aramco delivered the world’s first blue hydrogen shipment to Japan last year, with the company noting that it was actively exploring potential export markets in Asia.

For its part, Helios Industry’s green ammonia project will target imports mainly to the US and Europe once production begins in the second quarter of 2024.


While hydrogen fuel offers significan­t benefits in the transition away from fossil fuels, the industry has some hurdles to overcome to fulfil its potential.

Despite its promise, many analysts see hydrogen playing only a minor role

in the Middle East’s energy mix over the coming decades.

One of the major barriers to expansion is cost.

“Hydrogen has a critical role to play in delivering energy while lowering carbon dioxide emissions. If research and developmen­t is to contribute to both corporate success and broader socio-economic developmen­t goals, a sizeable investment is required at the early stages of any given technology, well before there is any certainty of a breakthrou­gh,” Ali al Janabi, country chairman for Shell in Iraq and the UAE, told OBG.

“Hydrogen-based fuels are no exception to this, with Shell working on the idea as early as the 1990s. Shell is part of several initiative­s aimed at encouragin­g the adoption of hydrogen in transport, and we are exploring solutions to provide hydrogen to homes and businesses, as well as refineries and factories.”

Although there is significan­t appetite for alternativ­e fuels to help cut carbon emissions, hydrogen production and export projects are likely to cost billions of dollars, requiring significan­t commitment from would-be investors.

“Irrespecti­ve of the colour, the key obstacle to developing the hydrogen economy is logistics. Hydrogen must be stored and transferre­d to the consumer in a cost-efficient manner. However, setting up the necessary infrastruc­ture will be relatively expensive,” Oussama el Jerbi, area managing director for Qatar at Consolidat­ed Contractor­s Company, told OBG.

“For the investment to be economical­ly viable and generate a timely and adequate return on investment, the hydrogen volumes to be transferre­d should be large enough. Therefore, in the early days of the hydrogen industry, the challenge is to scale production up and make the process commercial­ly sustainabl­e.”

Underlinin­g these concerns, earlier this year internatio­nal media reported that hydrogen-producing countries in the Gulf were seeking investors to purchase equity stakes in hydrogen export facilities as well as sign longterm supply contracts before moving ahead with the projects.

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